North American Energy Standards Board
801 Travis, Suite 1675, Houston, Texas 77002
Phone: (713) 356-0060, Fax: (713) 356-0067, E-mail:
Home Page: www.naesb.org
via posting & email
TO: NAESB Board of Directors
cc: NAESB Retail Structure Review Committee (RSRC)
RE: Report from the NAESB RSRC for Board Consideration
DATE: March 1, 2013
Dear NAESB Board of Directors,
Attached please find the report of the RSRC to the NAESB Board of Directors regarding the structure of the retail quadrants and the requirement detailed in the bylaws that each quadrant have a minimum of forty members, at least four segments and at least five members per segment – as approved by the NAESB Board of Directors on December 6, 2012. The report is part two of a two -part report. The first part was presented and approved by the Board of Directors at its December 6, 2012 meeting. The Board of Directors on December 6 approved:
1) the RSRC to begin the process of merging the quadrants and adjusting the segments such that the merged retail quadrants meet the requirements in the bylaws and takes into consideration preserving existing members and leadership,
2) the RSRC to bring the full recommendation with implementation to the board for its approval in April 2013, and
3) the structural change to be put in place through a motion of the board for a period of a minimum of two years, after which the board will review its success and determine if this interim solution should be codified in the NAESB Operating Practices, Bylaws and Certificate.
With this report, the RSRC asks the Board to approve the implementation of the direction noted above, including the segment definitions, assignments to segments of existing members, and other structural changes that may arise during the discussions on implementation. The RSRC also reconfirms with the board that the implementation be considered an interim step for a minimum of two years, to provide time to determine if the structure in place is supportive of the requirements of the bylaws. As such, a retail membership progress report will be presented at each Board meeting during the two year interim period, and will include any issues that arise as part of the restructured quadrant and segments.
NAESB Retail Structure Review Committee Report to the Board of Directors, for Consideration on April 4, 2013
March 1, 2013
North American Energy Standards Board
801 Travis, Suite 1675, Houston, Texas 77002
Phone: (713) 356-0060, Fax: (713) 356-0067, E-mail:
Home Page: www.naesb.org
North American Energy Standards Board
Retail Structure Review Committee (RSRC) Report
To be Presented to the NAESB Board of Directors on April 4, 2013
Report Components:
1. Background 2
2. Membership Profile and Work Products 3
3. Direction for Merging Quadrants 6
4. Options for Retail Structure 7
5. Actions to be Taken and Considerations 9
Appendices:
A. RSRC Committee Members 12
B. RSRC Meeting Notes 13
C. Current NAESB Membership Profile 14
D. Proposed Structure – Membership, Board of Directors and Executive Committee 26
E. NAESB Governance Documents Excerpts 30
F. Retail 2013 Annual Plan 31
NAESB Retail Structure Review Committee Report to the Board of Directors, for Consideration on April 4, 2013
March 1, 2013
North American Energy Standards Board
801 Travis, Suite 1675, Houston, Texas 77002
Phone: (713) 356-0060, Fax: (713) 356-0067, E-mail:
Home Page: www.naesb.org
BACKGROUND:
The Retail Structure Review Committee was formed in December 2004 by Michael Desselle, Chairman of the NAESB Board of Directors, to address the issue of membership in the retail quadrants and the thresholds set for membership in quadrants and segments, and the number of segments. Periodic reports are made to the Board of Directors on progress made toward meeting the membership thresholds and structural changes in support of the quadrants.
The mission of the group is: “The Retail Structure Review Committee functions solely at the pleasure of the NAESB Board of Directors and reports to the NAESB Board of Directors through the NAESB Board Managing Committee. The committee will make recommendations to the full board to address the membership levels in the retail electric and retail gas quadrants through possible changes to NAESB Bylaws, structural changes to the quadrants or their segments including merger of the two quadrants.”
The committee has typically discussed issues as part of the retail quadrants leadership meetings held the day before the board meetings. However on September 18, 2012, the committee held a meeting to begin discussing in earnest the changes that may be needed to the structure to address the inability of the retail quadrants to meet the membership thresholds outlined in the bylaws.
The bylaws specify that a quadrant should have at least forty members, and at least four segments with five members per segment. The board has waived these requirements in the past, with the expectation that the quadrants would grow based on the relevance of their work products. While the quadrants have produced a significant body of work, they have not been able to meet the thresholds outlined in the bylaws, since the inception of NAESB in 2002. In 2009, structural changes were made to the retail quadrants which resulted in an increase in members in the retail electric quadrant, but not in the retail gas quadrant.
In response to the discussions at the Board of Directors meeting on September 20, and the discussions at the Retail Executive Committees meeting on October 24, a conference call and web cast meeting was held on October 31 with follow up calls held on November 6, November 15 and November 30 to draft the first part of a two-part recommendation to the board for its consideration on December 6, 2012. The board adopted the recommendation and asked that the second part of the recommendation be presented for consideration at its April 4, 2013 meeting.
MEMBERSHIP PROFILE AND WORK PRODUCTS:
The membership in the retail quadrants began in 2002 meeting the threshold of forty members per quadrant, but declined quickly thereafter as can be seen in the charts below.
* The data for 2013 is as of February 2013
This decline in membership in the retail quadrants should not be seen as a disinterest in the benefit of using energy industry best practices or uniform telecommunication protocols at the state level. There are other groups and trade associations that have developed practices and guidelines, many under the direction of state regulatory agencies, and as such, those groups have not seen the need for a more rigorous ANSI-accredited process of standards development, such as is provided by NAESB, or in using NAESB as a balanced industry resource to support state regulatory policies. The decline in membership of the utility companies and local distribution companies can be explained through their reliance on key individuals to represent their interests and development of best practices and guidelines through trade associations and other regional groups. Industry consolidation can also be seen as a reason for the decline in membership. While this is true for all quadrants, it is proportionally more of an impact to the quadrants and segments with fewer members. Moreover, the consolidations shrink the pool of potential members for the quadrants.
The work products of the two quadrants can be seen below:
Retail Electric Quadrant / Retail Gas Quadrant /Reference / Description / Reference / Description /
RXQ.0 / Overview of Model Business Practices and Master List of Defined Business Terms / RXQ.0 / Overview of Model Business Practices and Master List of Defined Business Terms
RXQ.1 / Market Participant Interactions Model Business Practices MBPs / RXQ.1 / Market Participant Interactions Model Business Practices MBPs
RXQ.2 / Creditworthiness MBPs / RXQ.2 / Creditworthiness MBPs
RXQ.3 / Billing and Payment MBPs / RXQ.3 / Billing and Payment MBPs
RXQ.4 / Distribution Company-Supplier Disputes MBPs / RXQ.4 / Distribution Company-Supplier Disputes MBPs
RXQ.5 / Quadrant-Specific Electronic Delivery Mechanism MBPs / RXQ.5 / Quadrant-Specific Electronic Delivery Mechanism MBPs
RXQ.6 / Contracts Related MBPs / RXQ.6 / Contracts Related MBPs
RXQ.6.1 - Electronic Data Interchange Trading Partner Agreement (TPA) / RXQ.6.1 - Electronic Data Interchange Trading Partner Agreement (TPA)
RXQ.6.2 - Outline of a Non-Disclosure Agreement / RXQ.6.2 - Outline of a Non-Disclosure Agreement
RXQ.6.3 - Distribution Company-Supplier Service Agreement Outline / RXQ.6.3 - Distribution Company-Supplier Service Agreement Outline
RXQ.6.4 - Billing Services Agreement Outline for Consolidated Billing / RXQ.6.4 - Billing Services Agreement Outline for Consolidated Billing
RXQ.6.5 - Base Contract for Retail Sale and Purchase of Natural Gas or Electricity / RXQ.6.5 - Base Contract for Retail Sale and Purchase of Natural Gas or Electricity
REQ.6.6 - Production Connectivity Worksheet for Use in Markets Supporting the Registration Agent Model
REQ.6.7 - Distribution Company – Supplier Service Agreement for Use in the Markets Supporting the Registration Agent Model
REQ.6.8 - Standard Form Agreement Between a Market Participant and Registration Agent
REQ.6.9 - Load Serving Entity Application for Registering with Registration Agent
RXQ.7 / Internet Electronic Transport MBPs / RXQ.7 / Internet Electronic Transport MBPs
RXQ.8 / Retail Customer Information MBPs / RXQ.8 / Retail Customer Information MBPs
RXQ.9 / Retail Customer Billing and Payment Notification via Uniform Electronic Transactions MBPs / RXQ.9 / Retail Customer Billing and Payment Notification via Uniform Electronic Transactions MBPs
RXQ.10 / Retail Customer Enrollment, Drop, and Account Information Change MBPs / RXQ.10 / Retail Customer Enrollment, Drop, and Account Information Change MBPs
RXQ.11 / Retail Customer Enrollment, Drop, and Account Information Change Using a Registration Agent MBPs / RXQ.11 / Retail Customer Enrollment, Drop, and Account Information Change Using a Registration Agent MBPs
RXQ.12 / Retail Customer Inquiries MBPs / RXQ.12 / Retail Customer Inquiries MBPs
REQ.13 / Measurement and Verification (M&V) of Demand Response Programs MBPs
RXQ.14 / Service Request, Disconnection and Reconnection in the Registration Agent Model MBPs / RXQ.14 / Service Request, Disconnection and Reconnection in the Registration Agent MBPs
REQ.15 / Specifications for Common Electricity Product and Pricing Definition MBPs
REQ.16 / Specifications for Common Schedule Communication Mechanism for Energy Transactions MBPs
REQ.17 / Specifications for Retail Standard Demand Response Signals MBPs
REQ.18 / Retail Customer Energy Usage Information Communication MBPs
REQ.19 / Measurement & Verification of Energy Efficiency Programs MBPs
REQ.20 / Smart Grid Standards Data Elements Table MBPs
REQ.21 / Energy Services Provider Interface MBPs
- Green Button Initiative
REQ.22 / Third Party Access to Smart Meter-based Information MBPs
RXQ.23 / Supplier Marketing Practices MBPs / RXQ.23 / Supplier Marketing Practices MBPs
REQ.24 / Enrollment, Drop and Account Information Change in Demand Response Programs MBPs
RXQ.25 / Supplier Certification MBPs / RXQ.25 / Supplier Certification MBPs
There are 25 different topics and business functions addressed by NAESB for retail standards. Of the 25 business functions addressed, 10 functions (40%) are retail electric market specific. The other 15 business functions are market neutral – i.e., they provide both retail natural gas and retail electricity functionality. This can be easily determined in the chart above, as if there are no corresponding development items shown under the columns for retail gas, then the development was retail electric specific. Although energy efficiency and data privacy could be extended to retail gas and drafted as commodity neutral standards, it was determined by the retail gas interests that NAESB would not undertake such development for retail gas at this time. The ability to draft commodity neutral standards for smart grid applications and for demand response is not so clear cut, and the work products developed were for retail electric market applications only.
The standards developed are governed via the annual plans for the retail gas and retail electric quadrants and can be found in Appendix E. The 2013 annual plan for the retail interests is quite aggressive and continued efforts will be made to reach out to all interested parties, regardless of membership. As an example of the reach-out efforts, for demand response, energy efficiency, data privacy and smart grid related standards development, the retail electric quadrant has recently seen an increase in participation and membership, which we expect to continue. Should the retail gas market show interest in development of standards for other than customer choice programs, or if state regulators determine that NAESB is a resource that they can use to implement retail gas policies, we may also see an increase in retail gas membership, but to date, that has not been the case.
Contributing to the potential for growth in membership, the recent actions by the board to approve a meeting attendance fee for non-members and changes to the web site to delineate member from non-member benefits, we may see more interest in membership – particularly for those participants that follow the development of demand response, energy efficiency, data privacy and smart grid related standards – as these efforts have a high percentage of non-member participation. As there are more pressures brought to bear to introduce cost efficiencies in the retail markets, the need for and awareness of the benefits of standards development will be realized – which could result in an increase in participation and membership in NAESB.
Therefore, while the membership profile does not meet the threshold requirements of the bylaws, there are promising signs of membership increases based on board actions to delineate membership benefits from non-member participation and from development areas such as smart grid that attract interest.
DIRECTION FOR MERGING QUADRANTS APPROVED BY THE BOARD OF DIRECTORS ON DECEMBER 6, 2012:
The Board of Directors on December 6, 2012 approved:
1) the RSRC to begin the process of merging the quadrants and adjusting the segments such that the merged retail quadrants meet the requirements in the bylaws and takes into consideration preserving existing members and leadership,
2) the RSRC to bring the full recommendation with implementation to the board for its approval in April 2013, and
3) the structural change to be put in place through a motion of the board for a period of a minimum of two years, after which the board will review its success and determine if this interim solution should be codified in the NAESB Operating Practices, Bylaws and Certificate.